Category Archives: stocks

Best And Worst Q2’16: All Cap Growth ETFs, Mutual Funds And Key Holdings

The All Cap Growth style ranks eighth out of the twelve fund styles as detailed in our Q2’16 Style Ratings for ETFs and Mutual Funds report. Last quarter , the All Cap Growth style ranked seventh. It gets our Neutral rating, which is based on aggregation of ratings of 17 ETFs and 547 mutual funds in the All Cap Growth style. See a recap of our 1Q16 Style Ratings here. Figures 1 and 2 show the five best and worst rated ETFs and mutual funds in the style. Not all All Cap Growth style ETFs and mutual funds are created the same. The number of holdings varies widely (from 13 to 2185). This variation creates drastically different investment implications and, therefore, ratings. Investors seeking exposure to the All Cap Growth style should buy one of the Attractive-or-better rated ETFs or mutual funds from Figures 1 and 2. Figure 1: ETFs with the Best & Worst Ratings – Top 5 Click to enlarge * Best ETFs exclude ETFs with TNAs less than $100 million for inadequate liquidity. Sources: New Constructs, LLC and company filings Five ETFs are excluded from Figure 1 because their total net assets are below $100 million and do not meet our liquidity minimums. Figure 2: Mutual Funds with the Best & Worst Ratings – Top 5 Click to enlarge * Best mutual funds exclude funds with TNAs less than $100 million for inadequate liquidity. Sources: New Constructs, LLC and company filings PNC Large Cap Growth Fund ( PEWIX , PEWCX ) and Catalyst/Lyons Hedged Premium Return Fund (MUTF: CLPFX ) are excluded from Figure 2 because their total net assets are below $100 million and do not meet our liquidity minimums. iShares Core US Growth ETF (NYSEARCA: IUSG ) is the top-rated All Cap Growth ETF and Eaton Vance Atlanta Capital Select Equity Fund (MUTF: ESEIX ) is the top-rated All Cap Growth mutual fund. IUSG earns an Attractive rating and ESEIX earns a Very Attractive rating. Calamos Focus Growth ETF (NASDAQ: CFGE ) is the worst rated All Cap Growth ETF and ACM Dynamic Opportunity Fund (MUTF: ADOAX ) is the worst rated All Cap Growth mutual fund. CFGE earns a Neutral rating and ADOAX earns a Very Dangerous rating.. Gilead Sciences (NASDAQ: GILD ) is one of our favorite stocks held by MNNYX and earns a Very Attractive rating. Gilead has grown after-tax profit ( NOPAT ) by 39% compounded annually since 2005. Over the same time, Gilead has increased its return on invested capital ( ROIC ) from 37% in 2005 to a top-quintile 88% in 2015. Over the past five years, Gilead has generated a cumulative $26 billion in free cash flow . Despite the operational successes, GILD remains undervalued. At its current price of $88/share, GILD has a price-to-economic book value ( PEBV ) ratio of 0.6. This ratio means that the market expects Gilead’s NOPAT to permanently decline by 40%. However, if Gilead can grow NOPAT by just 4% compounded annually for the next five years , the stock is worth $183/share today – a 107% upside. DexCom (NASDAQ: DXCM ) is one of our least favorite stocks held by KAUBX and earns a Dangerous rating. Over the past decade, DexCom’s NOPAT has declined from -$37 million to -$54 million. The company’s ROIC has been negative in every year since IPO and is currently a bottom quintile -28%. Nevertheless, DXCM is priced as though the company will achieve high levels of profitability. To justify its current price of $64/share, DXCM must immediately achieve 5% pre-tax margins (from -13% in 2015) and grow revenue by 31% compounded annually for the next 17 years . We feel it should be clear just how overvalued DXCM is at the current price. Figures 3 and 4 show the rating landscape of all All Cap Growth ETFs and mutual funds. Figure 3: Separating the Best ETFs From the Worst Funds Click to enlarge Sources: New Constructs, LLC and company filings Figure 4: Separating the Best Mutual Funds From the Worst Funds Click to enlarge Sources: New Constructs, LLC and company filings D isclosure: David Trainer and Kyle Guske II receive no compensation to write about any specific stock, style, or theme. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Forget Broader Retail; Bet On Online Retail ETFs

Retail earnings in the first-quarter earnings season and retail sales data for April were completely diverging, with the former mauling investor sentiment and the latter ushering in sweet surprises. The reason for this deviation was disappointing results from several traditional brick-and-mortar operators, while web-based shopping surged. In a nutshell, consumers’ purchasing pattern is changing. Department stores like Macy’s (NYSE: M ), Kohl’s (NYSE: KSS ), J.C. Penney (NYSE: JCP ), Nordstrom (NYSE: JWN ) and many others soured investor mood this earnings season. With this, while many started to wonder if consumers are running short of cash and doubt economic well-being, a 1.3% jump in retail sales (sequentially) in April cleared all misconceptions. As per Trading Economics , sales growth was witnessed in 11 out of the 13 major categories. Sales at motor vehicle and parts (up 3.2%), gasoline stations (2.2%) and non-store retailers (2.1%) were the major growth drivers. In fact, April retail sales beat economists’ forecast of a 0.8% rise . Online Retailers Crushing Earnings Estimates The online e-commerce behemoth Amazon (NASDAQ: AMZN ) came up with stellar Q1 results. The company trumped the Zacks Consensus Estimate on both lies by wide margins. Higher-than-expected results were credited to increased demand for quick-turnaround delivery and gadgets like the Kindle and Echo as well as a fast-growing cloud computing business. Another top player in this field, eBay Inc. (NASDAQ: EBAY ), beat on both lines. In fact, the company partnered with BigCommerce to benefit online retailers. Chinese e-commerce giant Alibaba Group’s (NYSE: BABA ) revenues came in higher than our estimate, though profitability was a letdown. This clearly explains online-retailers’ edge over the mall-based retailers. Inside the Rise of Online Retailers As of now, online retail sales make up one-tenth of total retail and about 5% of annual e-commerce revenue in the U.S. The space is developing fast with the increased usage of smartphones and other mobile Internet devices. As per Statista , in 2013, 41.3% of global internet users had purchased products online; the figure is expected to grow to 46.4% by 2017. More than the U.S., the real growth opportunities lay in the underpenetrated emerging markets. Forget Retail, Be Bullish on Online Retail This situation makes it crucial to have a pure-play online ETF. Amplify Exchange Traded Funds thus launched a new product, namely the Amplify Online Retail ETF (NASDAQ: IBUY ), about a month ago. Except this, it is hard to get targeted exposure to online retail. But several consumer discretionary and internet funds serve this idea to a large extent. Below, we highlight all of them in detail. IBUY in Focus This new fund holds about 44 stocks and charges 65 bps in fees. The fund is heavy on the U.S. (75%), followed by China (8%). The fund’s top three holdings are Overstock.com (NASDAQ: OSTK ), Del and Wayfair (NYSE: W ). No stock accounts for more than 3.39% of the portfolio. Emerging Markets Internet & Ecommerce ETF (NYSEARCA: EMQQ ) The fund gives exposure to the internet and ecommerce sectors of emerging economies. Its top three holdings are Tencent ( OTCPK:TCEHY ) (8.47%), Alibaba (8.36%) and Naspers ( OTCPK:NPSNY ) (6.8%). The fund charges about 86 bps in fees. Since Goldman sees a boom in the Chinese internet segment, this ETF is worth a look given its notable exposure to the Chinese e-commerce segment. Apart from these two, investors can also look at the First Trust Dow Jones Internet Index ETF (NYSEARCA: FDN ), with considerable exposure on Amazon (11.93%) and eBay (3.69%). Among the broad retail ETFs, the VanEck Vectors Retail ETF (NYSEARCA: RTH ) deserves a look, as it invests about 15.43% weight in Amazon. Original Post

Tesla Price Target Cut; Monsanto’s Hiked; Best Buy Downgraded

RBC Capital lowered its price target on Tesla ( TSLA ), Jefferies upped its price target on Monsanto ( MON ) on views that Germany’s Bayer will sweeten its $62 billion takeover offer, and  Best Buy ( BBY ) was downgraded by Citigroup and Deutsche Bank. Tesla RBC Capital trimmed its price target on Tesla to 242 from 252. The electric automaker last week announced a $2 billion stock offering that will be used to fund a production ramp-up for the Model 3. RBC Capital forecast a fresh $1 billion equity raise in 2017 and lowered its estimate for Model 3 shipments. “We were always below Tesla’s vehicle delivery targets of 500,000 by 2018 and 1 million by 2020, but after speaking with industry contacts and reconsidering our model, we are tempering our delivery forecast to account for a slower Model 3 ramp,” said the RBC Capital report. Tesla shares were up 0.4% in premarket trading. Monsanto Jefferies upped its price target on Monsanto to 132. “We believe a higher-than-$130-per-share transaction is highly likely, with details emerging by August,” Jefferies said in the report. Monsanto on Tuesday rejected Bayer ’s ( BAYRY ) all-cash, $122-per-share offer. “To date, activist pressure has been limited. If a deal falters, we would expect (a) step-up in pressure for Monsanto to do more with its balance sheet,” said Jefferies. Shares rallied 2.3% early. Best Buy Best Buy, which on Tuesday forecast current-quarter profit below views and said its CFO was leaving, was downgraded to neutral by Citigroup and Deutsche Bank. Citigroup cited a lack of hot new consumer electronics products. Virtual reality will not take off until 2017, said Citigroup. “Categories with no secular threats — home improvement and auto parts — are performing better and are more predictable,” Citigroup said. Best Buy shares slumped 0.8%. Fleetmatics Pacific Crest Securities upgraded Fleetmatics ( FLTX ) to overweight with a price target of 54. Shares in the mobile fleet management software provider are down 20% in 2016 after surging 43% last year. “With plenty of solid runway for growth, rising (customer turnover) now better understood, a positively received management transition and a conservative earnings outlook for the year, we turn more positive on FLTX,” said the Pacific Crest report. In other analyst moves, Needham upgraded Workday ( WDAY ) to buy and raised its price target to 85 from 80.